Starting a business?

I am still feeling very lost. I have read some of the other threads but still a bit confused. I want to be able to say that I have a business but what do I REALLY need to do? I am worried that I am supposed to file taxes and I don't know what to do. I have a journal to keep track of expenses/milage etc. Is it necessary to get a tax id? Right now the truth is, I am in the hole a little because, when I get some cash, I invest in supplies and other goodies. I have just considered this a passion that I have and a pretty pricey hobby, which I am also ok with, cause I LOVE it! But when do I know it is time to do more. I want to be honest and don't want to start this venture out on the wrong foot. Any advice is appreciated.

Shannon Fennel has a great book on running a face painting business. It covers expenses, etc. It might be a good investment(find her on the forum & click on the word "HERE").

For Taxes, I have a form for each month that I track income, expenses & mileage. I have a folder to hold all my receipts. I file with my accountant(friend) along with my family expenses. Next year I will possibly switch to quarterly filing(if my hubby gets hired when he graduates from college).

Thanks Linda... the link to the book's contents is http://www.shannonfennell.com/bookcontent.html

Thank you so much. I have a friend that runs our local H&R Block that I talked to, but I think I am more confused now than I was before I spoke with her. Face painting is so different than most things. Thank you also for the suggestion on Shannon's book, I will look it up right now.

Hey there Shannon, do you recommend the cd or the book download?

It is the same document no matter which you go with. The download is faster as you just download it once the transaction is complete and you get the email.

Thank you.

Your welcome Shannon, you rock!
I'd go to your class in the UK, but I'm not doing any world traveling right now

Thank you both again, I feel much more at ease knowing I will be reading Shannon's book. Now, I can finally go to sleep and quit stressing.

Jody, don't worry about paying taxes until you've established yourself and are making some money. Here's an excerpt from Answers.com

You must file a tax return if you had net earnings from self-employment of $400 or more. This is your total self-employment income less the expenses paid in operating your trade or business, multiplied by 92.35%.

If you weren't self-employed (paid on a 1099 or ran your own business) then you would always want to file a return to claim the amount withheld and shown on your W-2, which with lower incomes will always be refunded to you.

In the beginning of your business you will likely have a net loss, so if you wanted to claim that you could. But I wouldn't worry about it until you are bringing in at least semi-steady business.

Thank you Angie. All of these things have been really overwhelming me. Last Summer I was doing a small day event in the park. A grandparent was hanging at my booth waiting on their child, as I was taking the money he made the comment," Boy I bet the tax man would like a chunk of this." It really bothered me because I want to be honest and would never want to be trying to pull a slick one, and he kinda ticked me off cause there again, no one on the outside understands all of the expences we are putting in. Oh well, I am just so thankful to God for giving me this incredible gift and I want to always handle it properly, no what I mean?

You should have said, "Well, I'm still in the red right now so the tax man will have to wait a bit." How crass of him to assume that you are cheating the government anyway. How does he know your business position??

I too was very overwhelmed when I first started out, but looking back on it most of my anxiety was self-inflicted. It really is very simple. You do not need a tax ID at all - you can operate as a sole proprietor and use your social security number for any event that requires a tax ID number (and then, only large corporations will ask for that, or possibly festivals). You do not need to collect sales tax on face painting (in TX and likely in OH too) as it is considered a non-taxable service rather than tangible goods, so you won't need to worry about a sales tax permit, etc.

If you'd like to claim your business on your 2011 taxes, try using TurboTax. It is so simple to add a business and the prompt will ask you questions about your business income and expenses so all you have to do is keep up with receipts and mileage and, and fill it out when the time comes. You can claim all manner of things, such as office supplies, promotional materials, fuel expenses, booth fees and even some of your food costs while at festivals or jobs.

Anyway, I hope this helps you feel a bit better about things. It's only overwhelming if you look at it all lumped together as an unfamiliar tangle of laws and procedures. If you take it apart and look at it individually, it's much more easily handled.

Thank you, all of this has been so valuable. I do feel better and am just going to keep track of everything and we'll see at the end of the year where we are. Big weight lifted.

I don't know if it's the same over there but in Oz you can register for free confidential tax assessment - I did it recently - it was by phone 'cause I'm rural but the guy was really helpful and answered all my questions about everything to do with being above board and self employed.
He kept trying to refer me to the website for answers but the info on there is in taxspeakgobbledigook so if in doubt go to the source and speak to a real person but I'm guessing Shannons book will answer all q's anyways.
I get really annoyed when people assume I'm earning blackmarket income but the sad truth is most carnies and market stall folk are.